Diageo has pledged to make capital investment to expand local production facilities across distilling, bottling and water treatment as well as increasing its agave farming capacity in Mexico, following the completion of its acquisition of Tequila Don Julio last week.

It also plans to build a new heritage centre at Atotonilco, Jalisco. The company says this planned activity, together with the acquisition costs of Don Julio, brings Diageo’s expected investment in Mexico to around US$400 million over five years, subject to the market continuing to perform in line with expectations.

In addition to increasing advertising and promotional spend to further build the Don Julio brand globally, Diageo estimates that the investment will also create around 200 direct jobs within Diageo Mexico and will generate a similar number of indirect roles in the initial three year period.

Diageo chief executive Ivan Menezes announced the investment during the state visit of Mexican president Enrique Pena Nieto to the UK. He said: “Mexico is a country of enormous opportunity and will form an important part of Diageo’s future. This investment reaffirms our long-term commitment to Mexico and we look forward to playing a bigger role in the industry, investing in our people and communities and supporting wider economic development.”

Diageo Mexico managing director Erik Seiersen added: “With this investment specifically in Mexico and more broadly across Tequila Don Julio, Diageo will play a key role in developing Mexico’s most important geographical indication and driving its success on a global scale.”

Diageo announced its intention to acquire full global ownership and control of Tequila Don Julio in November 2014 and after receiving all required approvals, announced completion of the deal on February 27, 2015.

The company says the acquisition expands Diageo’s leading position in Mexico and broadens its participation in the growing premium spirits sector. Over half of the Mexican population is already defined as middle class while the legal drinking age population is expected to increase to 64% in the next four years. For Diageo, this represents a significant opportunity in international spirits, which currently have relatively low penetration versus beer and local spirits.